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need help on question b please! Problem 22-18 A risky $385,000 investment is expected to generate the following cash flows: Year 1 $ 162,960 $140,900
need help on question b please!
Problem 22-18 A risky $385,000 investment is expected to generate the following cash flows: Year 1 $ 162,960 $140,900 $137,100 $159,466 a. If the firm's cost of capital is 8 percent, should the investment be made? Use Appendix 8 to answer the question. Use a minus sign to enter a negative value, if any, Round your answer to the nearest dollar 111,811 NPV: $ The investment should be made. b. An alternative use for the $385,000 is a four-year U.S. Treasury bond that pays $23,100 annually and repays the $385,000 at maturity. Management believes that the cash inflows from the risky investment are equivalent to only 75 percent of the certain investment, which pays 6 percent. Should the investment be made? Use Appendix B to answer the question. Do not round other intermediate calculations. Use a minus sign to enter a negative value, if any, Round your answer to the nearest dollar. NPV: $ 359,497 The investment should be made Step by Step Solution
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